Is Walgreens Boots Alliance, Inc. (WBA) the Best Medical Stock to Buy Under $20?

Walgreens Boots Alliance, Inc. (WBA) has been a prominent player in the medical and retail pharmacy sector, with a market capitalization of over $20 billion. As of October 16, 2024, WBA's stock price was $11.05, making it an attractive option for investors seeking medical stocks under $20. To determine if WBA is the best medical stock to buy under $20, we must analyze its financial performance, dividend history, and potential risks and challenges.



Financial Performance:
WBA's financial performance has been mixed in recent quarters. In the fourth quarter of fiscal 2024, WBA reported a loss per share of $3.48, compared to a loss per share of $0.21 in the year-ago quarter. Adjusted EPS was $0.40, down from $0.63 in the year-ago quarter. Sales increased by 2.6% year-over-year to $36.4 billion, up 2.5% on a constant currency basis. However, operating income was $111 million, down from an operating loss of $477 million in the year-ago quarter (WBA, Oct. 15, 2024).

In the first quarter of fiscal 2025, WBA reported a loss per share of $0.31, compared to a loss per share of $0.08 in the year-ago quarter. Adjusted EPS was $0.51, down 23.4% on a constant currency basis. Sales increased by 7.5% year-over-year to $39.5 billion, up 6.9% on a constant currency basis. Operating loss was $245 million, up from an operating loss of $39 million in the year-ago quarter (WBA, Jan. 10, 2025).

Dividend History and Yield:
WBA's dividend history shows a consistent payout to shareholders. As of October 16, 2024, WBA's latest dividend was $0.15 per share, paid on September 15, 2024. The annualized dividend yield for WBA is approximately 1.67% based on the current stock price of $11.05 (Source: Analyst Ratings for Walgreens Boots Alliance (WBA)).

Risks and Challenges:
WBA faces several risks and challenges that impact its stock price. These include:

1. Retail Environment: The company operates in a challenging retail environment, with softer U.S. retail and pharmacy performance, lower sale-leaseback gains, and lapping the reversal of incentive accruals (Q2 2024, Q4 2024, and FY 2024 results).
2. Reimbursement Pressure: Net reimbursement pressure impacts the company's earnings, as seen in the decrease in adjusted EPS in Q4 2024 and FY 2024.
3. Opioid Liabilities: The recognition of opioid liabilities in prior periods led to a non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and non-cash impairment charges for CareCentrix goodwill and equity investment in China in Q4 2024, affecting the company's net earnings and EPS.
4. Goodwill Impairment: Non-cash goodwill impairment charges, such as the one related to CareCentrix in Q4 2024, negatively impact operating income and adjusted EPS.
5. Footprint Optimization: The company's plan to close approximately 1,200 stores over three years, including 500 in fiscal 2025, may lead to short-term costs and potential disruption in operations.
6. Market Dynamics: Changes in market dynamics, such as those mentioned in the Q3 2024 results, can erode pharmacy margins and impact the company's financial performance.



In conclusion, Walgreens Boots Alliance, Inc. (WBA) offers a consistent dividend history and a relatively low stock price under $20. However, its financial performance has been mixed, with recent quarters showing losses and declining adjusted EPS. The company faces several risks and challenges, including a challenging retail environment, reimbursement pressure, opioid liabilities, goodwill impairment, and market dynamics. Investors should carefully consider these factors before making a decision to buy WBA stock. While WBA may not be the best medical stock to buy under $20, it is essential to monitor the company's performance and potential turnaround efforts.